Auditor Report of Servotech Engineering Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Servo tech
Engineering Industries Limited (the "Company"), which comprise the
Balance Sheet as at March 31, 2015 and the Statement of Profit and Loss
and Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 (The Act") with respect to
the preparation of these financial statements that give a true and fair
view of the financial position, financial performance and cash flows of
the Company in accordance with the accounting principles generally
accepted in India including the Accounting Standards specified under
Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act for
safeguarding the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of
appropriate accounting policies: making judgements and estimates that
are reasonable and prudent: and design, implementation and maintenance
of adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatements.

audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures
selected depend on the judgement, including the assessment of the risks
of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers
internal financial control relevant to the Company's preparation of the
financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on whether the Company has in
place an adequate internal financial controls system over financial
reporting and the operating effectiveness of such controls. An audit
also includes evaluating the appropriateness of accounting policies
used and the reasonableness of the accounting estimates made by the
Company's directors, as well as evaluating the overall presentation of
the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
statements.

Opinion

In our opinion, and to the best of our information and according to the
explanations given to us, the accompanying financial statements give
the information required by the Act in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2015;

(b) In the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by 'the Companies (Auditors' Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of
sub-section (1) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.

2. As required by section 143(3) of the Act, we report that:

a. We have sought and obtained all information and explanation which
to the best of our knowledge and belief were necessary for the purpose
s of our audit;

b. In our opinion, proper books of accounts as required by the law
have been kept by the Company so far as it appears from our examination
of those books;

c. The Company had no Branch offices during the year under audit.

d. The Balance Sheet, the Profit and Loss Statement, and the Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;

e. In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014;

f. On the basis of the written representations received from the
directors as on March 31, 2015, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015,
from being appointed as a director in terms of Section 164 (2) of the
Act;

g. With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanation given to us :

I. The Company does not have any pending litigations which would
impact its financial position.

II. The Company has no long-term contracts including derivative
contracts; as such the question of commenting on any material
foreseeable losses thereon does not arise.

III. There has not been an occasion in case of the group during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of delay in transferring such sums does
not arise.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER
LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF THE SERVO TECH ENGINEERING INDUSTRIES LIMITED, WE REPORT
THAT:

Clause Sub Particulars

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) As per information provided to us, fixed assets have been
physically verified by management at reasonable intervals and there
were no material discrepancies noted during such verification.

(ii) The Company does not have any inventory.

(iii) The Company has not granted any loan to parties covered in the
register maintained under section 189 of the Companies Act, 2013 ('the
Act'). Thus, paragraph 3(iii) of the Order is not applicable.

(iv) In our opinion and according to explanation given to us, there are
adequate internal control procedures commensurate with the size of the
company and the nature of its business with regards to purchase of
fixed assets and sale of service. We have not observed any major
weakness in the internal control system during the course of the audit.

(v) The Company has not accepted deposit from the public.

(vi) The Central Government has not prescribed the maintenance of cost
records under section 148(1) of the Act, for any of the services
rendered by the Company.

(vii) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including provident fund, income tax, sales tax, wealth
tax, service tax, duty of customs, value added tax, cess and other
material statutory dues have been regularly deposited during the year
by the Company with the appropriate authorities.

According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, income tax,
sales tax, wealth tax, service tax, duty of customs, value added tax,
cess and other material statutory dues were in arrears as at 31 March
2015 for a period of more than six months from the date they became
payable.

(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of income-tax,
sales-tax, wealth-tax, service-tax, customs duty, and excise duty on
account of any dispute except a sum of Rs. 2,12,960/- on account of
Provident Fund.

(c) There has not been an occasion in case of the company during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of reporting any delay in transferring
such sums does not arise.

(viii) The accumulated losses of the company have exceeded fifty
percent of its net worth. The Company has accumulated losses of Rs
36,870,538/- at the end ot the financial year and has incurred cash
losses in the financial year covered by our audit.

(ix) The Company did not have any outstanding dues to financial
institutions, banks or debenture holders during the year.

(x) In our opinion and according to the information and the
explanations given to us, the Company has not given any guarantee for
loans taken by others from banks or financial institutions.

(xi) The Company has not taken any term loan during the year.

(xii) Based on the audit procedures performed and information and
explanation given by the management, we report that no fraud or by the
company has been noticed or reported during the year.

We have audited the accompanying financial statements of Servotech
Engineering Industries Limited (the "Company"), which comprise the
Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss
and Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information,
which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the Accounting Standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956 (the Act) read with the
General Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
and in accordance with accounting principle generally accepted in
India. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing and other applicable authoritative
pronouncements issued by the Institute of Chartered Accountants of
India. Those Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence, about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditors'' judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by Management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, and to the best of our information and according to the
explanations given to us, the accompanying financial statements give
the information required by the Act in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by ''the Companies (Auditor''s Report) Order, 2003'', as
amended by ''the Companies (Auditor''s Report) (Amendment) Order, 2004'',
issued by the Central Government of India in terms of sub-section (4A)
of section 227 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement dealt with by this report comply with the
Accounting Standards notified under the Act read with the General
Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

(e) On the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER
LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF THE SERVOTECH ENGINEERING INDUSTRIES LIMITED.

Clause Sub Particulars

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) As per information provided to us, the fixed assets have been
physically verified by the management at reasonable intervals and there
were no material discrepancies noted during such verification.

(c ) There was no substantial disposal of fixed assets during the year.

(ii) The Company does not have any inventory.

(iii) (a) The Company has not granted/taken any loans, secured or
unsecured, to companies, firms or other parties covered in the register
maintained under Section 301 of the Act. Hence the sub-clause (a) to
(g) is not applicable to the Company.

(iv) In our opinion and according to explanation given to us, there are
adequate internal control procedures commensurate with the size of the
company and the nature of its business. During the process of audit, no
major weakness has been noticed in the internal control.

(v) According to the information and explanations provided by the
management, we are of the opinion that the contracts or arrangements
that need to be entered into the register required to be maintained
under Section 301 of the Act, has been entered.

(vi) The Company has not accepted deposit from the public under section
58A and 58AA of the Companies Act and rules framed there under.

(vii) The company does not have an formal internal audit system.

(viii) As informed to us, there are no cost records prescribed by the
central government under sec. 209(1)(d) of the Act, hence this clause
is not applicable.

(ix) (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is generally regular in depositing the undisputed statutory dues,
including provident fund, investor education and protection fund,
employees'' state insurance, income tax, sales tax, wealth tax, service
tax, customs duty, excise duty and other material statutory dues, as
applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of income-tax,
sales-tax, wealth-tax, service-tax, customs duty, and excise duty which
have not been deposited on account of any dispute except a sum of
Rs.2,12,960/- on account of Provident Fund.

(c) According to information and explanations given to us, there are no
amounts pending on account of disputes with any statutory authorities.

(x) The accumulated losses of the company have exceeded fifty percent
of its net worth. The Company has accumulated losses of Rs.
35,713,754/- at the end of the financial year and has incurred cash
losses during the financial year covered by our audit.

(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution or banks.

(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares debentures and other securities.

(xiii) The Company not being Chit Fund / Nidhi / mutual Benefit Fund
this clause and sub clause (a) (b) (c) (d) are not applicable

(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.

(xv) As informed to us the Company has not given any guarantee for
loans taken by others from bank or financial institutions.

(xvi) The Company had not taken any term loan during the year.

(xvii) Based on the examination of documents and records made available
and on the basis of information and explanations given to us, the
Company has not used funds raised on short term basis for long term
investments and vice versa.

(xviii) The Company has not made any preferential allotment of shares
to parties and companies covered in the register maintained under
section 301 of the Companies Act.

(xix) The Company has not issued any debentures; hence this clause does
not applies.

(xx) The Company has not raised any money by public issue; hence this
clause is not applicable.

(xxi) Based on the audit procedures performed and information and
explanation given by the management, we report that no fraud on or by
the company has been noticed or reported during the year.

1. We have audited the attached Balance Sheet of M/s SERVOTECH
ENGINEERING INDUSTRIES LTD. As the 31st March, 2011 the Profit & Loss
Account of the company and also the cash flow statement for the year
ended on that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 issued
by the Central Government in terms of Sub Section (4A) of Section 227
of the companies act, 1956, we enclose in the Annexure a statement on
the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph
(3) above, we state that

a) We have obtained all the information and explanations which to the
best of our knowledge and belief, were necessary for the purposes of
our Audit.

b) In our opinion proper books of accounts as required by law have been
kept by the company, so far as appears from our examination of such
books.

c) The Balance Sheet and Profit and Loss Account dealt with by this
Report are in agreement with the books of accounts of the Company.

d) In our opinion, the Profit and Loss Account and Balance Sheet comply
with the accounting standards referred to in Sub-section (3C) of
Section 211 of the Companies Act, 1956.(Except retirement benefits
which are accounted for on cash basis.)

e) On the basis of the written representations received from the
directors and taken on record by the board of Directors, we report that
none of the Directors is disqualified as on March 31, 2011, from being
appointed as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act 1956.

f) Attention is invited to the following notes in schedule 18 :

i) Note No. 4 regarding Debts considered doubtful for of recovery
amounting to Rs.34,15,744 for which no provision has been made in
accounts

ii) Note No. 5 regarding Non- Provision of retirement benefits. In our
opinion and to the best of our information and according to the
explanations given to us , subject to our comments as referred to in
(f) above impact of which is presently not ascertainable, the said
accounts read with other notes thereon give the information required by
the Companies Act, 1956 in the manner so required give true and fair
view and conformity with the general accounting principles accepted in
India :

a) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2011

b) in the case of Profit & Loss Account, of the profit for the year
ended on that date .

c) in the case of the cash flow statement, of the cash flows for the
year ended on that date.

ANNEXURE REFERRED TO THE AUDITORS' REPORT TO THE MEMBERS OF SERVOTECH
ENGINEERING IND. LTD. FOR THE YEAR ENDED 31ST MARCH, 2011.

1. a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.

b) As explained to us, the fixed assets have been physically verified
by the management during the year. The Company has a phased Program of
physical verification of its fixed assets which, in our opinion, is
reasonable having regard to the size of the Company and the nature of
its assented.

2. The company has no inventory.

3. The Company has granted unsecured loans & Advanced amounting to
Rs.10,11,642/- to The companies, covered in the register maintained
under section 301 of the Companies Act, 1956. They are not regular in
repayment of principle & interest. This is informed to us the
management trying to recover the same. The Company has not taken
unsecured loan from company's covered in the register maintained under
section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations
given to us, internal control procedures commensurate with the size of
the company and the nature of its business for the purchase of
inventories, fixed assets and for the sale of goods needs to be
strengthened.

5. In our opinion, and according to the information and explanations
given to us, the transactions that need to be entered in the register
in pursuance of section 301 of the Act have been so entered.

6. The Company has not accepted any deposits from the public and
consequently, the directive issued by the Reserve Bank of India, the
Provisions of Sections 58A and 58AA of the Companies Act, 1956 and the
rules framed there under are not applicable.

7. The Company dose not have formal internal audit system.

8. The provisions regarding maintenance of cost records are not
applicable to the Company.

9. In Respect of Statutory Dues.

a) The company is not regular in depositing Provident fund with
appropriate authorities a sum of Rs. 2,12,966/- on a/c of provident
fund is outstanding as on 31st March 2011

b) According to the information and explanations given to us, there are
no undisputed amount payable in respect of such statutory due which
have remained outstanding as at 31.03.2011 for a period of more than
six months from date they become payable Apart from that, a sum of Rs.
2,12,966/- on a/c of provident fund is still outstanding.

C) According to the information and explanations given to us, there are
no dues of

income tax, Wealth Tax, Sales Tax, Excise duty. Custom Duty & Cess
which have not been deposited on account of dispute.

10. The Company has accumulated losses of Rs.2,97,67,447/- at the end
of the financial year and has not incurred cash losses during the
financial year covered by our audit.

11. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Accordingly, clause 4(xii) of the order is not applicable.

12. In our opinion, the Company is not a chit fund or a nidhi /mutual
benefit fund or society. Accordingly, clause 4(xiii) of the order is
not applicable.

13. According to the information and explanations given to us, the
Company is not a dealer or trader in shares, securities, debentures and
other investments. Accordingly clause 4(xiv) of the order is not
applicable.

14. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions. Accordingly, clause 4(xiv) of the order is
not applicable.

15. In our opinion, the company has not taken any term loan during the
year.

16. On the basis of an over all examination of the balance sheet of
the company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short term
basis which have been used for long term investment, and vice versa.

17. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Act during the year. Accordingly, clause 4(xviii) of the
order is not applicable.

18. The Company has not issued any debentures during the year.
Accordingly, clause 4(xix) of the order is not applicable.

19. The Company has not raised any money by public issues during the
year. Accordingly, clause 4(xx) of the order is not applicable.

20. During the course of our examination of the books and records of
the Company carried out in Accordance with the generally accepted
auditing practices in India, and according to the Information and
explanations given to us, no fraud on or by the company has been
noticed or reported during the audit.

FOR D.C. SURANA & ASSOCIATES

Chartered Accountants

Sd/-

Place : Mumbai
(Proprietor)

Date : 29th August,2011 M.No.100-34074

F.R.NO. 115961W

Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s SERVOTECH
ENGINEERING INDUSTRIES LTD. As the 31st March, 2010 the Profit & Loss
Account of the company and also the cash flow statement for the year
ended on that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 issued
by the Central Government in terms of Sub Section (4A) of Section 227
of the companies act, 1956, we enclose in the Annexure a statement on
the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph
(3) above, we state that

a) We have obtained all the information and explanations which to the
best of our knowledge and belief, were necessary for the purposes of
our Audit.

b) In our opinion proper books of accounts as required by law have been
kept by the company, so far as appears from our examination of such
books.

c) The Balance Sheet and Profit and Loss Account dealt with by this
Report are in agreement with the books of accounts of the Company.

d) In our opinion, the Profit and Loss Account and Balance Sheet comply
with the accounting standards referred to in Sub-section (3C) of
Section 211 of the Companies Act, 1956.(Except retirement benefits
which are accounted for on cash basis.)

e) On the basis of the written representations received from the
directors and taken on record by the board of Directors, we report that
none of the Directors is disqualified as on March 31, 2009, from being
appointed as a Director in terms of clause (g) of sub- section (1) of
section 274 of the Companies Act 1956.

f) Attention is invited to the following notes in schedule 18 :

i) Note No. 4 regarding Debts considered doubtful for of recovery
amounting to Rs.98,17,159 and Note no - 6 regarding certain advances of
Rs 19,25,000/- to contractor for fixed assets for which no provision
has been made in accounts

ii) Note No. 5 regarding Non- Provision of retirement benefits.

In our opinion and to the best of our information and according to the
explanations given to us , subject to our comments as referred to in
(f) above impact of which is presently not ascertainable, the said
accounts read with other notes thereon give the information required by
the Companies Act, 1956 in the manner so required give true and fair
view and conformity with the general accounting principles accepted in
India :

a) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2010

b) in the case of Profit & Loss Account, of the profit for the year
ended on that date .

A N D

c) in the case of the cash flow statement, of the cash flows for the
year ended on that date.

ANNEXURE REFERRED TO THE AUDITORS' REPORT TO THE MEMBERS OF SERVOTECH
ENGINEERING IND. LTD. FOR THE YEAR ENDED 31ST MARCH, 2010.

1. a) The Company has maintained proper records showing full
particulars, including quantitative

details and situation of fixed assets.

b) As explained to us, the fixed assets have been physically verified
by the management during the year. The Company has a phased Program of
physical verification of its fixed assets which, in our opinion, is
reasonable having regard to the size of the Company and the nature of
its assented.

c) Company has advanced a sum of Rs. 19,25,000/- to various suppliers
for supply of Machineries and same has been shown under the head Fixed
Assets as Capital Work in progress. The suppliers have not yet supplied
machineries and in our opinion the said advances are doubtful of
recovery. If is informed to us the management is trying to recover the
money / or get the machineries. Expect there is no material
discrepancies were noticed on such physical verification. No Fixed
assets were disposed off during the year.

2. The company has no inventory.

3. The Company has granted unsecured loans & Advanced amounting to
Rs.19,60,000/- to The companies, covered in the register maintained
under section 301 of the Companies Act, 1956. They are not regular in
repayment of principle & interest. This is informed to us the
management trying to recover the same. The Company has not taken
unsecured loan from company's covered in the register maintained under
section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations
given to us, internal control procedures commensurate with the size of
the company and the nature of its business for the purchase of
inventories, fixed assets and for the sale of goods needs to be
strengthened.

5. In our opinion, and according to the information and explanations
given to us, the transactions that need to be entered in the register
in pursuance of section 301 of the Act have been so entered.

6. The Company has not accepted any deposits from the public and
consequently, the directive issued by the Reserve Bank of India, the
Provisions of Sections 58A and 58AA of the Companies Act, 1956 and the
rules framed there under are not applicable.

7. The Company dose not have formal internal audit system.

8. The provisions regarding maintenance of cost records are not
applicable to the Company.

9. In Respect of Statutory Dues.

a) The company is not regular in depositing Provident fund with
appropriate authorities a sum of Rs. 2,12,966/- on a/c of provident
fund is outstanding as on 31st March 2010

b) According to the information and explanations given to us, there are
no undisputed amount payable in respect of such statutory due which
have remained outstanding as at 31.03.2010 for a period of more than
six months from date they become payable Apart from that, a sum of Rs.
2,12,966/- on a/c of provident fund is still outstanding.

c) According to the information and explanations given to us, there are
no dues of income tax, Wealth Tax, Sales Tax, Excise duty. Custom Duty
& Cess which have not been deposited on account of dispute.

10. The Company has accumulated losses of Rs.3,00,46,559/- at the end
of the financial year and has not incurred cash losses during the
financial year covered by our audit.

11. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Accordingly, clause 4(xii) of the order is not applicable.

12. In our opinion, the Company is not a chit fund or a nidhi /mutual
benefit fund or society. Accordingly, clause 4(xiii) of the order is
not applicable.

13. According to the information and explanations given to us, the
Company is not a dealer or trader in shares, securities, debentures and
other investments. Accordingly clause 4(xiv) of the order is not
applicable.

14. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions. Accordingly, clause 4(xiv) of the order is
not applicable.

15. In our opinion, the company has not taken any term loan during the
year.

16. On the basis of an over all examination of the balance sheet of the
company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short term
basis which have been used for long term investment, and vice versa.

17. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Act during the year. Accordingly, clause 4(xviii) of the
order is not applicable.

18. The Company has not issued any debentures during the year.
Accordingly, clause 4(xix) of the order is not applicable.

19. The Company has not raised any money by public issues during the
year. Accordingly, clause 4(xx) of the order is not applicable.

20. During the course of our examination of the books and records of
the Company carried out in Accordance with the generally accepted
auditing practices in India, and according to the Information and
explanations given to us, no fraud on or by the company has been
noticed or reported during the audit.